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At petitioner’s request, Mr. Norris prepared an amended
return for petitioner for 1986. On January 5, 1989, petitioner
filed a Form 1040X, Amended U.S. Individual Income Tax Return,
for 1986. On the Form 1040X, petitioner increased his taxable
income by $4,008,928 and reported adjusted gross income and total
tax liability of $10,108,894 and $5,009,631, respectively. The
increase to income was described on petitioner’s amended return
as follows:
NET CHANGE TO INCOME Federal
ADJUSTMENTS TO SCHEDULE C
INCOME FROM SALES 4170185
INTEREST EXPENSE -161257
ADJUSTMENTS TO SCHEDULE B
INTEREST INCOME
ADD JEFFRIES & CO 91
LESS ON SCHEDULE C -91
4008928
On December 21, 1988, petitioner was indicted by a Federal
grand jury on charges that he conspired to defraud the Internal
Revenue Service and the Securities and Exchange Commission (SEC)
with respect to several of his attempted corporate acquisitions
which he engaged in during the 1980s. The charges related to
transactions petitioner carried out between April 1985 and
November 1986. The nine-count indictment charged petitioner with
misrepresenting the source of funds used to purchase stock on
Schedule 13D filed with the SEC (funds were not personal),
accumulating stock in the name of nominees (parking securities),
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